Polymetal Announces Q1 2008 Production Results

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Saint-Petersburg, Russia, April 21, 2008 - JSC "Polymetal" (LSE, MICEX, RTS: PMTL) ("Polymetal" or the "Company"), announced its production results for the quarter ended March 31, 2008.

HIGHLIGHTS

• Growth in gold (8% to 60Koz) and silver (32% to 4.7Moz) production was achieved compared to Q1 2007 due to improving gold grades at Khakanja and increased tonnages at Voro, Dukat, and Lunnoye
• Both gold and silver sales lagged production since refineries did not release bullion in the first three decades of January because of scheduled metal accounting procedures. Production and sales are expected to level out throughout the year
• Sharp increase in silver sales occurred as annual export license for this metal (whereas all gold is sold domestically, part of Polymetal's silver production is shipped to London for sale) was issued by the state earlier than in the previous year. Because of that, as well as elimination of hedge position and overall precious metals price environment, revenues nearly doubled compared to Q1 2007
• Acquisition of a 100% stake in Kubaka, an exciting property in the Magadan region, was completed in Q1 2008
• The Company reiterates its 2008 production target of 250-270 Koz of gold and 17-18 Moz of silver as well as mine EBITDA margin target of at least 50%

"We are satisfied with production growth achieved in the first quarter," said Vitaly Nesis, CEO of Polymetal. "Our company is well positioned to capitalize on unprecedented strength in precious metals prices as our growth strategy will continue to yield results both this year and in the medium term."

OPERATING MINES

Silver production grew by 41% to 3.5Moz due to elimination of excessive inventory in the gold room (Polymetal reports its production results on the basis of metal Dore or precipitate shipped to refineries) and processing higher volumes of lower-grade ore, which became possible as a result of decreasing cut-off grade in response to higher silver price.

As processing plant expansion is progressing on schedule, the Company is concentrating its effort on increasing productivity of the underground mine to 900Ktpa, which explains both a 30% increase in meters of underground development and a 12% increase in tons mined underground Q-on-Q. A 27% increase in waste mined is attributable to providing access to ore zones 13 and 14, located on the east flank of the deposit, in accordance with the mine plan.

A 22% growth in quarterly throughput is a function of processing plant automation and flash flotation section reaching its design capacity.

Throughout 2008 the Company plans to further increase processing tonnages of ore with silver grades below reserve average (of 543g/t) which, given the currently favorable precious metals prices, is expected to result in better economics.

On the expansion side, SAG mill was successfully tested and is expected to be fully integrated to the production circuit in May. Foundation for the ball mill should be finished in June; mounting of the mill will start immediately with the expected completion in Q3 2008. Other equipment (flotation machines, screens, filter presses) will arrive on site and be commissioned throughout the year.

In 2007 open pit mining operations were completely switched from Lunnoye to a smaller-scale Arylakh, Lunnoye satellite, which explains a 43% decrease in waste mined and a 32% decrease in ore mined compared to Q1 2007.

At the same time, underground development at Lunnoye continued to accelerate with the goal to start full-scale underground mining of ore with silver grades above reserve average (of 347g/t) in Q3 2008. The target for FY 2008 underground development is 2,000 meters.

The bulk of feed for the processing plant continued to arrive from Arylakh, having lower gold and higher silver grades than Lunnoye ore. Starting from 2009, a proportion of ore coming to the processing plant from Lunnoye and Arylakh will be around 50/50.

Gold grades continued to improve at Khakanja as a result of processing ore mined from the second pit (first pit was depleted in 2007 which led to decline in grades throughout most of the year) and adding ore mined from Yurievskoye (Khakanja satellite) to the feed. Second pit is expected to be mined out in Q3 2008; overburden removal from the third pit should start in the same quarter.

27 thousand tons of ore was mined at Yurievskoye and transported to the Khakanja processing plant in Q1 2008; during the next three years the Company plans to mine and process approximately 100 thousand tons of Yurievskoye ore per annum. Starting from the next season, all mining and haulage at the property will be performed by contractors; ore transportation between Yurievskoye and Khakanja is already outsourced.

Due to positive correlation between silver grades and recoveries established for Khakanja ore, a 13% decline in silver grades led to a 4 percentage points decrease in silver recovery and a 12% drop in silver production.

In Q1 2008, a tender for Khakanja processing plant Phase II automation was conducted and the winner was determined. According to the automation service contract, comminution and reagent sections will be fully automated in 2008, and classification and thickening sections - in 1H 2009. Fully automated processing plant should lead to improved recoveries through higher quality of equipment servicing and lower reagent usage ratios.

A 10% increase in waste mined and a 34% decrease in ore mined is attributable to concentration of mining on pushback of the northern pit limit required by re-optimized pit sequence (being part of the Voro expansion project).

In the meanwhile, expansion of the CIP processing plant is on track to be completed on-time. SAG mill with annual capacity of 900Ktpa was commissioned in Q1 2008, which contributed to a 24% increase in processing of lower-grade primary ore that came mostly from the stockpiles.

Foundation for leaching tanks should be prepared in Q2, for filtration unit - in Q3 2008. Leaching tanks will be delivered on site and mounted in Q3 2008; filter-presses produced by a German firm Andritz will be commissioned in Q4 2008.

DEVELOPMENT PROJECTS

Albazino

9,257 meters was drilled at Albazino in the first quarter. Anfisa and Olga ore bodies continue to return economic widths and grades along strike north and down-dip.

The Company is currently working on the feasibility study of the project that should come out together with JORC-compliant reserve calculation audited by Snowden Mining Industry Consultants in June 2008.

The documents necessary for putting statutory reserves on the state balance are being prepared; statutory reserve confirmation necessary for the project's approval by the state is expected to be issued by the State Reserve Commission ('GKZ') in the second half of 2008.

Polymetal targets to increase Albazino resource base to 3Moz of gold by the end of 2008, begin construction of Albazino concentrator and Amursk POX plant in 2009, and generate first gold in Q4 2010.

Kubaka

In January 2008, Polymetal completed acquisition of the 98.1% stake in Omolon Gold Mining Company ("Omolon"), the owner of the Kubaka gold mining properties, from a subsidiary of Kinross Gold Corporation. In February, Polymetal acquired the remaining 1.8% stake from the Russian Fund of Federal Property, thus consolidating a 100% ownership in Omolon.

After the acquisition, the Company focused its attention on Birkachan, the closest to the processing plant and the most prospective deposit in the Kubaka package. In the first quarter, geological department of Polymetal came out with an extensive exploration program including 7,200 meters of diamond drilling and aimed at establishing reserves sufficient for re-launching of the processing plant in 2010.

Additionally, Polymetal Engineering is estimating the possibility of seasonal heap leaching of low-grade Birkachan material (that was never considered economic by Kinross in the then prevailing gold price environment). Technological testing will be conducted on site in the summer and scoping study results will be released in Q3 2008.

CONFERENCE CALL

Polymetal will hold a conference call on Monday, April 21, 2008 at 5:30pm Moscow time (2:30pm London time; 9:30am New York time).

To participate in the call, please dial:

   +1 800 230-1096    (toll-free from the US), or

   +1 612 332-0107    (international).

Please be prepared to introduce yourself to the moderator.

Recording of the conference call will be available at    +1 800 475-6701    (toll-free from the US), or  +1 320 ... (international), access code 919810, from 08:00pm Moscow time Monday, April 21, till 11:59pm Moscow time Monday, May 5.

Pavel Danilin

VP, Corporate Finance and Investor Relations

Tel.:  +7 (812) 334-3666

E-mail: danilin@polymetal.ru

Website: www.polymetal.ru

***

This release includes statements that are, or may be deemed to be, "forward-looking statements".  These forward-looking statements can be identified by the use of forward-looking terminology, including the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or "should" or similar expressions or, in each case their negative or other variations or by discussion of strategies, plans, objectives, goals, future events or intentions.  These forward-looking statements all include matters that are not historical facts.  By their nature, such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.  Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. Forward-looking statements are not guarantees of future performance.  Many factors that could cause the Company's actual results, performance or achievements to differ materially from those expressed in such forward-looking statements. These forward-looking statements speak only as at the date of this release.  The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

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